In the 2015-16 Budget, the Government announced the Growing Jobs and Small Business package to help reduce regulatory impediments to small businesses' growth.
As part of the package, the Government confirmed its commitment to introducing a legislative framework to facilitate crowd-sourced equity funding (CSEF). The consultation paper which the Government has released today outlines key elements of the Government's CSEF framework for public companies and seeks feedback on whether the CSEF framework should be extended to proprietary companies.
The paper considers transparency and governance obligations for proprietary companies which may be required to protect CSEF investors who do not have any other connections to the company or its management.
The consultation paper also considers areas of the Corporations Act 2001 which may be unnecessarily restricting the ability of small proprietary companies to raise capital to invest and grow. In particular, it discusses:
- the shareholder limit for proprietary companies; and
- the 'small scale offerings' exception to the disclosure requirements.
As announced as part of the Growing Jobs and Small Business package, this paper also examines the regulatory requirements imposed on small proprietary companies by the Corporations Act. It seeks to identify ways to reduce compliance costs for such companies to enable them to direct more of their time and resources into operating and growing their businesses. The following specific areas of the Corporations Act are canvassed:
- the requirement to make an annual solvency resolution;
- the requirement to maintain a share register;
- ways to facilitate the execution of documents; and
- completing and lodging forms with the regulator.
The consultation paper seeks views on these and other ways to reduce the regulatory burden on small proprietary companies.